The Reserve Bank of India is asking the nation’s credit card issuers not to authorize payments to companies offering online foreign-exchange trading to the country’s citizens.
Through foreign-exchange trading, users are able to buy and sell currency to make money based on fluctuating currency values. However, regulations under India’s Foreign Exchange Management Act of 1999 do not allow resident Indians to trade in foreign exchanges in domestic or overseas markets, according to the central bank.
Recently, many online and electronic trading portals have begun offering foreign-exchange trading services in India, seducing residents with offers of high returns.
Several individuals have lost heavily in online foreign-exchange trading in the recent past, according to the central bank. Such initiatives exhort consumers to trade in foreign exchanges by requiring them to pay the initial amount in Indian rupees and engaging agents to contact the victims to convince them of the profitability in such trading, according to the bank.
“They ask the victims to make the initial payments for such online [foreign-exchange] trading transactions through credit cards,” a spokesperson for the bank tells PaymentsSource. “The card-issuing companies are advised to refrain from permitting payments for such unauthorized transactions.”
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